Since we reported last year on the performance of SurfStich shares in the on-line retailer plunged by nearly 30 % this week, pushing it’s stock to almost worthless status, after the group conceded it’s outlook had severely worsened. It came on the back of a fresh earnings forecast that tips losses will more than double to as much as $11.5 million this year.
After touching a new low just 6.9 cents againest a high of more than $2 in late 2015 SurfStitch has confirmed it’s tag as one of the worst sharemarket floats in recent years.
Investors who jumped into the much hyped IPO in 2014 at $1 per share have now suffered a catastrophic 93% loss. In the past three years, SurfStich has been battered by a wave of calamities and operational missteps, including the sudden and mysterious resignation of it’s Co – Founder and CEO, a string of acquisitions that eventually had to be written off, profit warnings and a boardroom re – shuffle.
Recently appointed CEO Mike Sonand, a retail veteran who once led rival surfwear retailer Globe International through a similar near death experience in 2003, was forced to hand shareholders yet another downgrade forecast the fourth in two years. As tough conditions made his turn around plans to push through.
In a statement to the ASX, SurfStitch said that although it had made progress in cutting costs, streamlining operations and transferring it’s flagship website to a new platform in the second half, the general business environment for apparel and footwear had proved difficult in all of it’s markets.
It’s Surfdome business in The United Kingdom had particularly been hit by intense margin and sale pressure. SurfStich is now forecasting a full year loss of between $10.5 million – $11.5 million againest a previously advised range of $5 million – $6.5 million.
To trim costs further SurfStich is also closing down it’s United States operating arm.
SurfStitch is the latest in a growing number of retailers to issue profit warnings on the back of challenging trading conditions.